Consumer prices in U.S. little changed as fuel costs drop

The cost of living in the U.S. was little changed in January for a second month as a drop in energy costs made up for gains in other goods and services.

The unchanged reading in the consumer-price index compared with a 0.1% gain projected by the median estimate of economists surveyed by Bloomberg, figures from the Labor Department showed today in Washington. The so-called core measure, which excludes more volatile food and energy costs, increased by the most in more than a year, pushed up by gains in clothing, hotel rates and airline fares.

Fuel costs have climbed this month after an increase in the payroll tax also took a bite out of take-home pay, which may prompt households to rein in purchases and cause companies like Ruth’s Hospitality Group Inc. to hold the line on prices. Joblessness at 7.9% may also restrain wage gains, providing a further check on inflation that will give the Federal Reserve room to maintain monetary stimulus.

“The big story from the consumer standpoint is the rise in gasoline prices in the last four weeks, which will start to strain wallets at a time when there’s also a problem with tax refunds going out more slowly and the payroll tax hitting them,” said Omair Sharif, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut, who correctly projected prices would be unchanged.

Consumer-price index estimates in the Bloomberg survey of the 84 economists ranged from a drop of 0.1% to a gain of 0.4%.

Jobless Claims

More Americans filed applications for unemployment benefits last week, returning to levels seen prior to the holiday period and indicating little change in the pace of firings.

Jobless claims increased by 20,000 to 362,000 in the week ended Feb. 16, the Labor Department reported today in Washington. The median forecast of 48 economists surveyed by Bloomberg called for an increase to 355,000. The number of applications in three states and the District of Columbia were estimated because of the holiday-shortened week, a Labor Department spokesman said as the data was released.

Stock-index futures held earlier losses after the report. The contract on the Standard & Poor’s 500 Index maturing next month fell 0.1% to 1,505.8 at 8:53 a.m. in New York.